DMN: Medical venture entrepreneurs at Frisco conference say funding climate improving

Thursday, July 22, 2010

Dallas Morning News

By SHERYL JEAN / The Dallas Morning News

Entrepreneur Gary Wald wants to raise more than $800,000 to market NetMed Care, which is developing e-clinics staffed by an on-site nurse at large companies.

"Telemedicine has everybody intrigued," said Wald, who already raised $200,000 and helped start another telemedicine company. "This will change medicine as we know it."

In his latest fundraising effort, Wald on Wednesday pitched his company to dozens of potential angel and venture capital investors at the second annual MedVentures conference in Frisco. He hopes to open the first e-clinic at a Dallas office tower by the end of the year and projects revenue of $41 million in five years.

The consensus of entrepreneurs at the conference is that the fundraising climate is getting better after a rough few years, but there's still a dearth of seed and start-up money.

Venture capital investments in biotechnology and medical devices, which together are referred to as life sciences, peaked in 2007 and hit a low point in early 2009. But funding for the first half of this year is increasing.

For the Dallas area, venture capitalists invested $12.1 million in life sciences in the first half of this year compared with nothing at all last year, according to data from PricewaterhouseCoopers   . Statewide, life sciences raised $57.2 million, beating the $9.4 million for the first half of 2009. Nationally, biotechnology raised the most money of any industry in the first half of 2010 - $2.1 billion, up 31 percent from a year ago.

The MedVentures conference certainly reflects pent-up demand for funding.

Twenty entrepreneurs pitched their companies to a crowd of about 400 people this year, compared with six companies and about 300 attendees last year, said Hubert Zajicek, director of NTEC Inc., a Frisco incubator for medical and clean technology that hosted MedVentures. Also, last year's six companies have raised a total of more than $15 million in the past 12 months - a natural endorsement for this year's conference, he said.

Hot areas appear to be health care software, telemedicine, home health care products, chronic disease diagnosis and management, and cancer treatment, Zajicek said.

Jay Tydlaska, chief executive of Magaw Medical in Fort Worth, isn't worried.

He and business partner Amy Sheppard created a disposable video device used to help insert breathing tubes in people's airways. Both Tydlaska and Sheppard are nurse anesthetists.

He already attracted $1 million from angels - or wealthy individuals - and wants to raise up to $1 million to launch the product later this year and develop a second version.

"We have a really good product, and I think people see that," he said. "We have not had a problem finding money so far."

Angel and venture capital investors said they're seeing more deals and better-quality applicants.

"We're really pleased with the reception we're getting, and the quality of the deals is getting better," said Kathy Harris of Noro-Mosely Partners, a venture capital firm in Atlanta. She has been looking for Dallas and Austin investments since last fall but hasn't made an investment in a Dallas company yet because most are too early-stage, she said.

Dallas angel investor Tom Montgomery sees up to 40 potential deals a week vs. up to 10 two years ago, reflecting more startups and more people seeking financing. However, he said he's financed more later-stage deals than early-stage and seed deals since the recession.

What about entrepreneur Wald? Already one angel investor said he was interested in learning more about NetMed.

"Angels are saying, 'I've got money. Is now the right time?' " Wald said.

http://bit.ly/NTECMedVentures2010DallasMorningNews